Microeconomics and the Law of Supply and Demand
Microeconomics and the Law of Supply and Demand
Thomas Smiley
ECO 365
May 31st, 2015
Alexander Heil
During the simulation of Goodlife Inc. I was able to see how the effects of a lower rent verses a higher rent had on the vacancy percentage. In our simulation the town of Atlantis had only one rental agency with apartments available. There were single family homes available too but the need for renting was with apartments. I got to see how the supply and demand worked with this rental property simulation. The town of Atlantis saw a rise in population which led to a higher demand for vacant units. This caused Goodlife to raise its rent to meet the growing demand for its available units. But as the demand for renting the units fell so did the demand. This meant Goodlife had to lower its rental price to meet the lesser demand for renting. This is a good example of microeconomics. When I looked at the simulation for examples of macroeconomics I found it when the government stepped in to put a cap on the rent amount. In the simulation there was a survey that showed individuals were living outside of Atlantis rather than renting a place in the city limits where they work. As many of us do currently in our own lives we usually can’t afford to live in the city or area where the best jobs are. I am a prime example, I commute 50 miles one way to work as it’s where the best salary is. I live in an area where housing and rents are affordable and the overall cost of living is cheaper too. In the simulation, the government put a cap of $1550 for the monthly rent of a two bedroom apartment. This was meant to allow middle class families and individuals the opportunity to live where they work. Because of the rent cap, Goodlife didn’t rent out every apartment available as profits would not be able to keep up with the maintenance cost of having every unit rented. When we look at what a shift in supply and demand curve we see that clearly
Thomas Smiley
ECO 365
May 31st, 2015
Alexander Heil
During the simulation of Goodlife Inc. I was able to see how the effects of a lower rent verses a higher rent had on the vacancy percentage. In our simulation the town of Atlantis had only one rental agency with apartments available. There were single family homes available too but the need for renting was with apartments. I got to see how the supply and demand worked with this rental property simulation. The town of Atlantis saw a rise in population which led to a higher demand for vacant units. This caused Goodlife to raise its rent to meet the growing demand for its available units. But as the demand for renting the units fell so did the demand. This meant Goodlife had to lower its rental price to meet the lesser demand for renting. This is a good example of microeconomics. When I looked at the simulation for examples of macroeconomics I found it when the government stepped in to put a cap on the rent amount. In the simulation there was a survey that showed individuals were living outside of Atlantis rather than renting a place in the city limits where they work. As many of us do currently in our own lives we usually can’t afford to live in the city or area where the best jobs are. I am a prime example, I commute 50 miles one way to work as it’s where the best salary is. I live in an area where housing and rents are affordable and the overall cost of living is cheaper too. In the simulation, the government put a cap of $1550 for the monthly rent of a two bedroom apartment. This was meant to allow middle class families and individuals the opportunity to live where they work. Because of the rent cap, Goodlife didn’t rent out every apartment available as profits would not be able to keep up with the maintenance cost of having every unit rented. When we look at what a shift in supply and demand curve we see that clearly